A merger is a corporate strategy of combining different companies into a single company in order to enhance the financial and operational strengths of both organizations.
An acquisition is a corporate action in which a company buys most, if not all, of another firm’s ownership stakes to assume control of it. An acquisition occurs when a buying company obtains more than 50% ownership in a target company.
Examples of Mergers and Acquisitions
- Bayer acquisition of Monsanto
- Dow Chemical and DuPont merger
- Syngenta and Chemchina merger
- Acquisition of Corus Group by Tata Steel in the year 2006.
- Acquisition of Myntra by Flipkart in the year 2014.
- The merger of Fortis Healthcare India and Fortis Healthcare International.
- Acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals.
- Acquisition of Negma Laboratories by Wockhardt
Merger V/S Acquisition
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Particulars
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MERGER
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ACQUISITION
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Meaning
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Combination of 2 or more companies to expand their business
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A company when takes control of another and rules its operations
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Nature of Decision
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Mutual decision
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Friendly or hostile
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Purpose
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Decrease competition and increase operational efficiency
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Instantaneous growth
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Size of Business
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More or less same.
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The size of the acquiring company will be more than the size of acquired company
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Minimum no. of companies involved
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3
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2
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Power
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Equal
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Big companies hold
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Legal Formalities
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More
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Less
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Formation of a new company
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✔
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✘
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Issuing of new stocks
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✔
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✘
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Types
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v Horizontal
v Vertical
v Congeneric
v Reverse
v Conglomerate
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v Hostile
v Friendly
v Buyout
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Why M & A?
Reasons For Failure of M & A
By
Anish Kumar
Divya Bisht
Mohammed Shahrukh Qureshi